The following information is provided for the Delta Corporation (amounts are in millions):
-Refer to the information above. Forecast the 2009, 2010, and 2011 project cash flows for Delta Corporation. Assume the only investments are the investments in plant, property, and
Equipment.

Question

The following information is provided for the Delta Corporation (amounts are in millions): 
-Refer to the information above. Forecast the 2009, 2010, and 2011 project cash flows for Delta Corporation. Assume the only investments are the investments in plant, property, and
Equipment.

Quizplus · Accepted Answer

To forecast the project cash flows for Delta Corporation, we can use the information provided to calculate the change in plant, property, and equipment from year to year, and assume that this change represents the investment in these assets.

2008 plant, property, and equipment balance = $11 
2009 plant, property, and equipment balance = $12.4 
Investment in plant, property, and equipment in 2009 = $12.4 - $11 = $1.4

2009 plant, property, and equipment balance = $12.4 
2010 plant, property, and equipment balance = $13.9 
Investment in plant, property, and equipment in 2010 = $13.9 - $12.4 = $1.5

2010 plant, property, and equipment balance = $13.9 
2011 plant, property, and equipment balance = $17.4 
Investment in plant, property, and equipment in 2011 = $17.4 - $13.9 = $3.5

Therefore, the forecasted project cash flows for Delta Corporation are: 
2009: $1.4 
2010: $1.5 
2011: $3.5

The closest answer option to this forecast is A.

The Following Information Is Provided for the Delta Corporation (Amounts